Invoicing software for small businesses

Cycle billing refers to billing your clients based on a customized schedule for each of them, as opposed to billing all of them at once on the same day. This practice is convenient for businesses as it allows them to distribute workload and have an overview of clients that have, and those who have or haven’t paid yet.

The length of the billing intervals can depend on the client, the type of service offered, the planned budget of your business, or the client’s paying capacity. The usual strategy is to bill a specific percentage of customers every day, instead of billing them all together at once (i.e. single-date billing).

Typically, there are three billing cycles you can follow – daily, weekly, and monthly. vcita’s automatic billing supports all of them, allowing you to choose whichever billing cycle works best for you and your clients. Besides the billing cycle length, you can also choose between sending the billing statements using email, SMS, or both.

There are three most common billing methods in the service business:

Billable hours. The most popular billing method in the service business, the system of billable hours refers to the amount of time a business spends providing its service for which it charges the client at an hourly rate agreed upon in advance. To be able to charge their billable hours, businesses need to record the amount of time spent providing services for each client every day.

Subscription billing. In this type of billing practice, the business bills the client on a regular, subscription basis (specified by the business). This way, the business charges the client in exchange for the services the business provides on a continuous basis, for the entire duration of the subscription.

Project billing. When a business is undertaking an entire project at a price that was agreed upon in advance and can’t be changed, we call this practice project billing. There’s usually a time limit involved within which the business is expected to complete the given project.

Accounts receivable refers to the outstanding invoices or bills or the amount of money that clients owe a business for the services delivered to them. They are created when a business allows its client to purchase its services on credit, in installments, or as a subscription. Once you send your client a bill, it becomes part of your accounts receivable, until the client pays it.

On the balance sheet of your business, accounts receivable represent money due in the short term. Since they represent funds owed to the business, they’re listed there as an asset.

Accounts receivable differ from accounts payable, as they represent funds owed to the business. Accounts payable, on the other hand, represent funds that the business owes to others, such as creditors or suppliers. Whereas accounts receivable are listed as assets on your balance sheet, accounts payable are listed as liabilities.

Sometimes, a client may not pay the account receivable. Once you confirm this, you’ll have to write off the amount as a one-time charge (a charge you expect to be an isolated event) or a bad debt expense (a share of accounts receivable you assume will never collect).